Broadband Regulation

Broadband Regulation

Research

In a new study for the Mercatus Center at George Mason University, Roslyn Layton and Michael Horney survey broadband in America and compare broadband costs around the world. They find that the United States is a global leader in broadband, as measured by the level of broadband-enabled economic activity, the number of Internet-based companies, the level of digital exports, and the level of Internet-enabled employment.

Although intended to promote competition and innovation among Internet content providers,“net neutrality” rules reduce innovation by broadband service providers. Within limits, broadband providers may offer different plans that vary the quantity and quality of their service. But they usually cannot vary the service itself: broadband providers are generally required to offer customers access to all lawful Internet traffic, or none at all. This all-or-nothing broadband homogenization places America increasingly at odds with international markets, particularly with regard to mobile broadband. This paper examines the diverse array of wireless broadband products available worldwide, and uses these international innovations to illuminate the difficulties posed by net neutrality principles in the United States. Broadband access is merely one part of a much broader Internet ecosystem. Regulators’ focus on one narrow set of relationships in that ecosystem retards innovation and limits the ability of Americans to share in the global revolution currently taking place for mobile services.

This paper discusses the history of spectrum management and the commercial and federal uses of the radio frequencies. Several policy proposals for reclaiming federal spectrum are presented, along with recommendations for rationalizing spectrum management.

The possible extension of the telephone system’s “sender-pays” rule to the Internet is a contentious international political issue under consideration at the World Conference on International Telecommunication (WCIT). This paper examines whether higher international telephone rates support or impede telecom sector growth in the receiving country. It uses data on international telephone rates from the US from 1992-2010 to explain growth in foreign telecom sectors during the same period.

This working paper evaluates the merits of data caps and other usage-based pricing strategies. Usage- based pricing shifts more network costs onto heavier Internet users. This can reduce costs for others and make broadband more accessible to low-income consumers. Usage-based pricing can also reduce network congestion. While data caps can be used to hurt competition, antitrust law teaches that regulators should intervene only if consumers suffer harm and cannot switch Internet providers. Otherwise, broadband providers should be free to experiment with different pricing strategies to compete for customers and fund future network upgrades.

Getting rid of obsolete regulation of the broadcast and distribution of video pro- gramming is essential to the efficient operation of a market that has the potential to greatly increase the benefits to consumers.

Expert Commentary

Brent Skorup debunks five myths surrounding net neutrality: the Internet has always been neutral; net neutrality regulations are the only way to promote an open Internet; net neutrality regulations improve broadband competition; all prioritized Internet services are harmful to users; net neutrality rules will make broadband cheaper and Internet services like Netflix faster.

FCC Commissioner Wheeler announced his intention to propose new “Net Neutrality” rules this month which will be voted on by the FCC on February 26. The Mercatus Center’s Technology Policy Program scholars have weighed in heavily on this issue, including Public Comment to the FCC, commentary in the press, and a study on mobile Net Neutrality, “Innovations in Mobile Broadband Pricing.” In addition to these resources, below are highlights from Mercatus scholars on Net Neutrality.

Though the economy has improved only in fits and starts over the past few years, one bright spot remains constant: The technology and communications industry. Part of this success is because Silicon Valley and the tech sector aggressively develop popular consumer products before bureaucrats and lawmakers have time to delay them.

Unfortunately, the orchestrated reaction in recent weeks might spark rash political decision-making, and leave us with onerous rules, delaying or making impossible new broadband services. Hopefully, in the ensuing months, reason wins out, and FCC staff are persuaded by competitive analysis and possible innovations, not T-shirt slogans.

Over the years we have been told that when it comes to broadband, Europe leads America. That the U.S. model tends too much toward monopoly, while Europe’s ensures strong competition among many small players. Well, queue the schadenfreude.

Experts

Adam Thierer is a senior research fellow with the Technology Policy Program at the Mercatus Center at George Mason University. He specializes in technology, media, Internet, and free-speech policies, with a particular focus on online safety and digital privacy. His writings have appeared in the Wall Street Journal, the Economist, the Washington Post, the Atlantic, and Forbes, and he has appeared on national television and radio. Thierer is a frequent guest lecturer and has testified numerous times on Capitol Hill.

Recent Events

This program will: provide an introduction to net neutrality and briefly explain the history of the debate, lay out the arguments for and against net neutrality, and discuss mechanisms to ensure the Internet remains a vibrantly free conduit and tool for ideas, innovation and economic growth.